The SEC Lost Its Case Against Richard Heart. A Finnish Tax File Found Him Anyway.

On Wednesday morning, October 14, police in Istanbul's Beşiktaş district detained Richard James Schueler, better known as Richard Heart, the founder of HEX, PulseChain and PulseX, along with his wife. On Saturday, Turkey's justice minister, Akın Gürlek, confirmed the arrest and listed what officers found across searches of 15 addresses: $7.15 million in cash, six cold wallets, seven firearms, 1,400 rounds of ammunition, 28 watches, 97 pieces of jewelry and 300 bags. Three men police described as bodyguards were detained too.

The paper that put him in a cell was not an American securities complaint. It was an Interpol Red Notice issued on behalf of Finland in December 2024, where police want him over alleged aggravated tax fraud and the alleged assault of a 16-year-old. Europol's listing put the tax allegedly avoided in the "hundreds of millions of euros." Heart has not been convicted of anything, and the Finnish case has never been tested in court.

A tax file. Not the Howey test.

The regulator that reached Richard Heart was never the one crypto spent years fighting.

For most of this decade, the HEX story was told as a securities story. In July 2023 the SEC sued Heart and his three projects, alleging the offerings raised more than $1 billion without registration and that at least $12 million of investor money went to sports cars, watches and a 555-carat black diamond called "The Enigma." The litigation release describes the HEX sale as running from December 2019 to November 2020, with Heart allegedly collecting more than 2.3 million ETH.

That case never reached the question everyone cared about. In February 2025, Judge Carol Bagley Amon of the Eastern District of New York dismissed it on jurisdictional grounds, writing that the alleged misappropriation happened through wallets and platforms "none of which were alleged to have any connection with the United States." In April the SEC told the court it would not refile. Heart called it "the only case where the SEC lost and crypto won across the board."

Eighteen months later he is in Turkish custody anyway.

The SEC's loss settled where he lived, not what he sold.

It is tempting to read the 2025 dismissal as a verdict on HEX. It wasn't one. Judge Amon never ruled on whether HEX was a security, whether the "recycling" transactions the SEC described were misleading, or whether the luxury purchases were misappropriation. As Decrypt's account of the ruling notes, the court rejected the idea that Heart's virtual appearances at US conferences were enough, and found the complaint did not show he contracted with or collected payment details from US investors through his websites.

In other words, a US citizen who was living in Finland had built a token sale that, on the SEC's own pleadings, could not be tied to America closely enough for an American court to hear it. That is a statement about reach. The merits were left on the table, permanently, once the agency declined to amend.

Finland's interest has a different shape. A tax authority does not need to decide whether a token is an investment contract. It needs to know where a person lived, what came in, and what was declared. Europol's listing alleges Heart failed to file business returns for multiple years and underreported income on his personal returns. Those are questions about residency and money, and residency is precisely the thing the SEC case turned out to lack.

Crypto's legal fights are about classification. The arrests keep coming from somewhere else.

The industry has spent years and enormous legal budgets on one question: is this token a security? That fight is still going. The SEC's own proposed Regulation Crypto Assets, unveiled in August, would create a $5 million one-time exemption and a $75 million annual exemption for crypto offerings, plus a safe harbor once an issuer has stopped its "essential managerial efforts." Its comment period is running now.

Those are real rules and they matter. But notice the scale. The SEC alleged HEX and its sister projects took in more than $1 billion. The largest exemption on offer caps a year's raise at $75 million and comes with financial statements and ongoing reporting. Nothing in that framework would have reached a founder whom a federal judge already ruled outside US jurisdiction.

What reached him was the oldest machinery there is: a national police force, a tax claim, an Interpol notice and a cooperative host country. According to The Block, Istanbul's chief prosecutor ran the operation with police intelligence and financial crimes units, backed by Turkey's national intelligence agency. None of those bodies has an opinion on Howey.

Concede the industry's point: the SEC case deserved to lose.

There is a fair argument on the other side, and it should be made plainly. The SEC under its prior leadership sued first and built jurisdiction later, and in the HEX case it could not show the basic ties a court requires. A regulator that cannot meet that bar should lose, and the outcome was a legitimate check on overreach. Heart's lawyer, David Kirk, was right that it ended in a complete victory for his client.

It is also fair to be skeptical of Red Notices. Interpol itself says a Red Notice is a request to locate and provisionally arrest, not an international arrest warrant, and human rights groups have long criticized governments that abuse the system. Turkey's justice minister went further than Finland has, tying the notice to "$1 billion in crypto fraud" in the US and Finland, a characterization that blurs a dismissed American civil case with an untested Finnish criminal one. Reports on the raid have disagreed on basic figures; early Turkish media counts of $4 million in cash and 64 watches, reported by CoinDesk, differ from the official tally. Heart is entitled to the presumption of innocence in every one of these proceedings.

All of that holds, and the thesis still stands. The point is not that Heart is guilty. It is that the legal question crypto has organized itself around for a decade turned out to be irrelevant to the one proceeding that actually put a major token founder in custody. HEX holders who expected the "SEC lost and crypto won" moment to close the book learned otherwise this week; the token fell about 14% in 24 hours, according to The Block's CoinGecko figures.

Founders should be modeling the tax collector, not just the securities lawyer.

For anyone launching a token, the lesson is uncomfortable and practical. Securities exposure depends on where your buyers are and how you market. Tax exposure depends on where you live and where your money lands, and it follows you across borders through treaties and police cooperation that are far older and better oiled than anything in crypto regulation. Moving a project offshore can defeat a securities complaint. It does not defeat a residency.

It also means the transparency that protects buyers protects founders. A raise whose proceeds, allocations and unlock schedules sit in public contracts, rather than in personal wallets and cash in a house, is far easier to explain to any authority that eventually asks. Opaque treasuries tend to get explained in someone else's words, sometimes in a justice minister's post on X.

Finland has not said whether it has filed an extradition request, and Turkey has not said what happens next. What is already clear is that the case Washington could not hold was not the end of the story. The industry spent years arguing about what a token is, and the first authority to catch up with HEX's founder only wanted to know what he owed.